The state-backed Industrial Revitalization Corp. of Japan on Friday formally selected a consortium led by household product giant Kao Corp. as buyers of scandal-hit Kanebo Ltd. and Kanebo Cosmetics Inc.

In the deal, Kao will pay a total 410 billion yen to acquire Kanebo Cosmetics and its patents and other rights. The three investment funds in the victorious group -- MKS Partners Ltd., Advantage Partners LLP and Unison Capital Inc. -- will buy Kanebo Ltd. for an undisclosed sum. The two target firms were formed when Kanebo was split up after seeking the state's help to rebuild itself two years ago.

It was a rather ironic result for Kanebo, which snubbed Kao's offer to buy its cosmetics unit at the last minute and instead turn to IRCJ for help due to opposition from its union.

Kao President Motoki Ozaki said Friday that he expects the synergy between the two will help the company survive the intense competition in the cosmetics market.

He said Kao will keep Kanebo Cosmetics as a separate entity, adding he had no intension of restructuring the firm.

As for Kanebo, which under IRCJ help had been slashing noncore operations to focus on food, health-care and household products, the investment funds will take over its revival efforts.

The officials of the three funds declined to divulge how much they will pay for the company, saying they have to first report to their investors.

They also said that in the agreement with Kao, the firm they bought will lose the right to use the Kanebo brand name after two years.

Kanebo was the one of the biggest bailout cases for IRCJ.

One of the reasons IRCJ chose the Kao-led group over the other bidders was that it presented a plan that would allow the Kanebo brand to live on, IRCJ President Atsushi Saito told reporters.

"Not only would it keep the Kanebo name, but it would keep Kanebo's management, and bring out the best in Kanebo," Saito said. "In consideration of company morale and the hard work of employees, this was a very easy proposal to accept."

Kanebo Cosmetics is by far the most valuable part of the package because its "superb" sales network remains intact, Saito boasted.

The Tokyo Stock Exchange delisted Kanebo earlier this year after it was revealed that ailing Kanebo had been window-dressing its books for years.

Kao won out after extensive bidding contests.